USD/JPY: Is the flatter yield curve capping gains?

The uptick in Asian stocks put a bid under the USD/JPY pair.
But, gains capped at 107.50.
Yield curve flattening could hurt the USD.

Omkar Godbole FXStreet Contributor

The USD/JPY pair picked up a bid in early Asia, tracking the uptick in the Asian stocks.

However, a break above 107.50 remains elusive, possibly due to relentless flattening of the yield curve. As of writing, the spread or the difference between the US 10-year treasury yield and the 2-year treasury yield is 54 basis points - the lowest level since October 2007. A flatter yield curve is USD bearish and vice versa.

That said, the pair may find acceptance above 107.50 if the S&P 500 futures gain altitude. As of now, the futures are flat lined.

Also, the fact that USD/JPY is reporting gains amid flattening of the yield curve, suggests the USD bears may have run out of steam.

USD/JPY Technical Levels

Currently, the pair is trading at 107.40. A move above 107.50 would expose resistance lined up at 107.91 (Feb. 21 high) and 108.28 (Jan. 26 low). On the other hand, a break below 107.18 (session low) could yield a pullback to 106.88 (April 17 low), under which a major support is seen at 106.56 (21-day MA).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bullish	Neutral	Low
1H	Bearish	Neutral	High
4H	Bearish	Neutral	Low
1D	Bullish	Neutral	Shrinking
1W	Bearish	Neutral	Expanding
Updated Apr 19, 04:45 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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